VF Corp. to Buy Rock & Republic - Analyst Blog

V.F. Corporation (VFC), a global leader in branded lifestyle apparel with brands like Wrangler, Lee, etc., announced that it is expanding the portfolio of its brands by including the the fashionable Rock and Republic name to its kitty. As per the agreement, V.F. Corporation will only acquire the trademarks and intellectual property of the bankrupt Rock and Republic.

The business operations and retail store of the company will not be a part of the acquisition. The acquisition is expected to close in the spring of 2011.

The acquisition is, however, subject to approval by the U.S. bankruptcy judge handling Chapter 11 petition. The hearing is scheduled to be held on January 19, 2011. The company did not disclose the financial terms of the acquisition. V.F. Corporation stepped in as suitor after the deal between Bluestar Alliance and Rock and Republic Brand fell apart in mid-December. The acquisition will add a good contender for competition in the premium-denim field dominated by Los Angeles designers.

A fashion brand known for its denim, Rock and Republic filed a petition for bankruptcy protection in bankruptcy court in New York in April with an aim to lighten its liabilities on the balance sheet. The loan of $15 million from Los Angeles apparel executive Richard Koral, whose repayment was due on April 2, 2010, compelled the company to file for such a petition.  Richard Koral is the only secured creditor of the company. Unsecured creditor loan is of more than $15 million.

V.F. Corporation is a global leader in branded lifestyle apparel with more than 30 brands, including Wrangler, The North Face, Lee, Vans, Nautica, 7 For All Mankind, Eagle Creek, Eastpak, Ella Moss, JanSport, lucy, John Varvatos, Kipling, Majestic, Napapijri, Red Kap, Reef, Riders and Splendid.

Considering the apprehensions about stringent consumer spending and presence of strong competitors across the globe, such as Polo Ralph Lauren Corp.(RL) and Sears Holdings Corporation (SHLD), we are compelled to hold on to our Neutral recommendation on V.F. Corporation in the long run.

With an expectation that the stock will outperform the broader U.S. equity market over the next one-to-three months, VF currently has a Zacks #2 Rank (Buy) rating.

 
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